Why is a failed breakout probably bullish? Check out Pinterist ($PINS). (August 12, 2019)
PINS
Pinterest ( NYSE: PINS ): the stock broke out to a new high here. I don’t really think this is a bear trap; it ran up as high as 36.10, right up here. This is where the stock ran to, there was enough selling pressure to reject this move but I still think this is bullish, just not today. The reason I think it’s bullish is because first of all, this was the big break out on earnings, right? A big move higher, it ran as high as 35.21 but then the stock pulled back and it consolidated.
After this kind of big move like it had in one day, the thing ran 25 percent, you would expect this thing to retrace and gap but it hasn’t, that’s kind of a big deal. Instead, it has run to a new high even though it didn’t hold that high. This was the original high, which was 35.29. On this day the high was 35.21, so we got $.08 difference, this was a key high right here and the stock did push through it.
Again, it just didn’t last. And so if you look at this on an intraday chart you can see what happened. Not really first thing in the morning, mid-morning the stock breaks out and then was immediately hit with selling but there was no follow-through on the downside. My suggestion is, you keep an eye on this stock. This could very easily grind around in here for quite a while, but the way it is trading it looks like it is only a matter of time before it breaks out to the upside.
So I would suggest putting a stop on your software at $35.00. If the stock hits $35.00 and your alert is triggered then you want to watch it really, really carefully. If it continues to move higher then you are buying the stock and you’ve got a stop that is just a little bit below $35.00. So if the same thing happens again that happened today, where the stock again, broke out then reversed, you don’t have to ride it all the way down. You have got a stop that is pretty tight so you risk is minimal and your probability of profit is a little bit higher because you see what the stock has done in the past and you can behave accordingly.
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